Within a particular business, typically there are well-established requisition rules regarding the procedure to be followed in the procurement of goods and services, e.g., computer equipment or office supplies. Requisition rules will vary from company to company, depending upon a number of factors.
In a first step, the individual within the business entity (hereinafter referred to as a “company”) identifies a need and selects desired goods or services from a catalogue provided by internal or external suppliers.
An authorization step requires designated individuals to approve the purchase of the goods or services. Within the requisition rules, the designated individuals may be identified in what is referred to as an “authorization workflow.” The authorization workflow may identify a single person, e.g., a finance manager, or a number of individuals. The authorization workflow for two independent companies is not likely to be the same.
If the requisition is approved, a purchase order is generated. The purchase order is sent to a vendor of the requested goods or services. The vendor then supplies the requested item, i.e., goods or services. Payment may be sent with the purchase order, but is typically sent in response to an invoice generated by the vendor for delivery with the item.
Electronic procurement systems simplify this procedure by providing users with virtual shops offering different items to be ordered online. Typically they are set up in a computer network using a client server structure. After accessing a virtual shop a showcase containing representations of items available in the shop is displayed on the user screen. The user performs his/her procurement by selecting representations of the items to be ordered and by putting the items into a representation of a shopping cart also displayed on the screen. An authorization process is started at the end of the procedure, usually when the shopping cart is being saved for further processing.
A typical authorization scenario includes the value of total shopping cart contents being compared either to a fixed amount stored in the system, or to a spending limit (sometimes called budget) defined by the purchaser's position within the company's organizational structure, or by the purchaser's role within the workflow or by purchaser's definition as user. If the value of the total shopping cart contents is below the fixed amount or spending limit an automated approval is generated. If the value of total shopping cart contents is above the fixed amount or spending limit an approval workflow is started which implements for example at least one manager's approval. Alternatively the purchaser can successively remove items from the shopping cart until a shopping cart value below the fixed amount or spending limit is reached.
This functionality is thought not appropriate for professional buyers but is suitable for desktop users carrying out low value purchases. It enables employees to order/purchase goods and services up to the specified amount without getting a manager's approval each time and thus reduces the total expenses for purchases.
It constitutes a main disadvantage of the above outlined authorization scenario that users can create multiple shopping carts in the procurement system each with a value slightly below the approval threshold thus creating procurement transactions above their approved limits without further approval.